Some housing bubble news from Wall Street and Washington. Associated Press, "Lennar Corp., one of the nation's largest homebuilders, said Thursday it swung to a loss in the first quarter as it absorbed charges to write down asset values and costs, while new home sales and prices sank. Sales fell 62 percent to $1.06 billion from $2.79 billion in the year-ago period. The average selling price fell 8 percent."

"Deliveries of new homes were down 60 percent to 3,596 homes. New home orders were down 57 percent to 3,045, with a cancellation rate of 26 percent."

"For Lennar, the average sales price of homes delivered dropped to $278,000, down from $303,000 in the year-ago period, partly due to higher sales incentives offered to homebuyers. The company averaged $48,000 in incentives per home delivered in the first quarter, compared to $45,500 per home delivered in the first quarter of 2007."

"'Home inventories have been expanding due to the high number of foreclosures, negotiated 'short sales,' and stretched homeowners looking to sell homes they can no longer afford' said CEO Stuart Miller. 'While sales are occurring and clearing prices are being reached, the pace of overall housing inventory growth is exceeding absorption at the current time.'"

"The news comes a day after the Commerce Department reported that sales of new homes fell in February for the fourth straight month, pushing activity down to a 13-year low."

The LA Times. "Driven by a 'brazen obsession' with generating sub-prime mortgages, Irvine's New Century Financial Corp. engaged in improper accounting that overstated its profit and allowed top executives to reap millions of dollars in inflated or undeserved bonuses, a U.S. Bankruptcy Court examiner said in a report released Wednesday."

"Michael J. Missal's report said senior managers 'turned a blind eye' to the 'ticking time bomb' created by the high-risk lending in 2005 and 2006. At the same time, Missal said, New Century's auditor, KPMG, contributed to the problems by failing to exercise due care in reviewing its books, leading to material misstatements in New Century's financial reports."

"Certain...bonus payments to executives may be recovered 'under unjust enrichment and bankruptcy law theories,' he said."

The New York Times. "The 580-page report documents how New Century lowered its reserves for loans that investors were forcing it to buy back even as such repurchases were surging. Had it not changed its accounting, the company would have reported a loss rather a profit in the second half of 2006."

"The company first acknowledged that its accounting was wrong in February 2007 and sought bankruptcy protection less than two months later as its lenders stopped doing business with it. New Century was the first large mortgage company to fail and its quick demise marked the beginning of the end for the heady era of cheap money that helped home prices soar."

"The report described New Century, once a Wall Street darling, as a company bent on making loans, layering 'the risk of loan products upon the risks of loose underwriting standards.'"

"Some 70 percent of the loans originated by New Century featured low initial 'teaser' interest rates designed to increase after a period of time. The report said 40 percent of the company's loans were so-called stated-income loans that don't require borrowers to verify their income."

From Bloomberg. "FGIC Corp.,the bond insurer owned by Blackstone Group LP and PMI Group Inc., said it's walking away from an agreement to provide $1.9 billion in guarantees on mortgage-linked securities because Credit Agricole SA and IKB Deutsche Industriebank didn't live up to their side of the deal."

"FGIC 'has no further obligation' because certain responsibilities weren't met and IKB, the German bank that's had to be bailed out four times since July, misrepresented its condition, the insurer said in a statement today."

"'These guys should have a new motto: Heads we win, tails we rescind,' said Julian Mann, the VP for fixed income at First Pacific Advisors LLC, which manages $3.4 billion of bonds."

The Union Leader. "Joseph Vignolo says he had no trouble making ends meet before he was laid off about five years ago. Last fall, he says, his savings ran out and he and his family couldn't keep up with the mortgage payments home. After months of delinquency, the home was foreclosed on and put on the auction block."

"Yesterday, Vignolo protested as a brief auction was held at the property. During the brief event, the home was sold back to the bank, according to an auctioneer from Quincy, Mass. The property has an assessed value of $319,900, according to property records."

"Vignolo's wife and 16-year-old daughter have already moved out, but Vignolo remained at the property after the auction. He said he'll stay put until he's forced out, but he won't resort to violence."

"'Instead of 'the British are coming, the British are coming,' it's 'the bankers are coming, the bankers are coming,' he said, standing in his driveway before the late-morning auction."

"No one attempted to remove Vignolo from the property yesterday morning. He started an argument with the auctioneer and accused one man who came of being a real-estate flipper."

"His actions may be unique, but Vignolo's situation is familiar to many throughout the country. New Hampshire saw a 96 percent increase in foreclosures last year, and the trend is expected to grow this year."

"Vignolo said he could've made a deal and walked away with money, but he decided to make a statement instead. He said he shouldn't be forced to leave the home where his family has lived for years. 'It's not about the money. It's not about the money at all,' he said. 'It's about the principle of the thing.'"

The Wall Street Journal. "This week John McCain and Hillary Clinton both used the housing-market upheaval to offer a window on what their Presidencies would look like. The contrast in philosophy and program is something voters should pay attention to."

"Mr. McCain's approach is his description of how we got into this mess. He doesn't merely blame Wall Street or 'predatory' lenders, though he does fault both along the way. Instead, he offers a largely accurate description of how the housing and credit bubbles arose, driven by lax lending standards fed by a belief that housing prices could only go up. Then add some financial innovation that is now being stress-tested -- and found wanting."

"The major flaw in this presentation is that it leaves out the Federal Reserve, whose far too easy monetary policy helped to create the subsidy for mortgage and other debt in the first place. But the virtue of Mr. McCain's overall diagnosis is that it doesn't treat all borrowers as victims, and instead assumes that everyone shares some responsibility for getting wrapped up in the housing mania."

"Refreshingly, too, the Arizona Senator framed his policy response around personal accountability for bad choices. He thus rejected one favorite Bush White House-Democratic idea of the moment, which is to lower or drop the downpayment requirement for loans backed by the Federal Housing Administration."

"As Mr. McCain pointed out, such no-downpayment loans were part of the mania problem. One reason the FHA has fewer subprime problems than private lenders is that its borrowers had skin in the game."

"What he does seem to understand...is that most Americans are responsible borrowers who don't want to underwrite the losses of those who aren't. In that, he is politically smarter than Senators Clinton and Obama."

"McCain defended his housing plan today. 'We may have to do more, but to raise taxes as Senator Obama wants to do or some kind of massive bailout, that is a needless expenditure' of taxpayer dollars, McCain said."

"Obama today reiterated his call for reworking existing subprime loans into affordable, long-term fixed loans and creating a foreclosure prevention fund to help keep Americans in their homes. He has pledged that as president, he would seek a mortgage-tax credit for homeowners and crack down on mortgage fraud and predatory lenders."

"Obama mocked John McCain on Wednesday for urging government restraint in responding to the mortgage crisis, saying the Republican would 'just sit back and watch' as millions of Americans lost their homes."

"'We've been down this road before, (he said). It's the idea that government has no role at all in solving the challenges facing working families -- that all we can do is hand out tax breaks for the wealthiest few and let the chips fall where they may.'"

The Denver Post. "Developers of downtown condominium projects are raising their prices, even as much of the metro area is in the midst of a housing slump. Great Gulf Group will raise prices soon for the 200 residences in its 51-story tower by up to 5 percent."

"'It's typical of any project to raise pricing as units sell,' said Dee Chirafisi of Kentwood City Properties. 'It really reinforces the value for the early investors who got in months ago. They have some instant equity, and they know the pricing is heading in that direction rather than the developer doing discounts.'"

"Many potential buyers have not reserved or put condos under contract because, given the broader housing market, they're waiting for prices to drop."

"'I think the public was anticipating that would happen because of everything they hear about the market,' she said. 'But raising the prices is the way to get projects sold. You've got to give people deadlines.'"

"Among the other reasons for price increases on new projects are unexpected costs for building the project, leaving the developer no choice but to raise prices. Another is when the market allows it — and that seems to be the case with downtown condos."

"'If the market is telling you there is more than enough demand for the supply you are providing, that gives you the opportunity to raise prices,' said Byron Koste, director of the real-estate center at the University of Colorado at Boulder."

"Koste said downtown is distinct from the rest of the metro market, where prices and sales have been dropping for months. 'It's a good place to consider investing,' he said. 'They're not making more downtown.'"

From Realty Check. "A week ago last Monday, when several employees of Bear Stearns were leaving the building with cartons and plants, Ray Schmitz, an associate broker at Coldwell Banker Previews International in New York City, was standing outside the building, handing out his business card."

"Schmitz says he’s waiting for the fallout, not just at Bear, but up and down Wall Street and beyond. The housing bubble that inflated hedge fund coffers is now doing just the opposite on the way down, and that threatens the up-‘til-now unshakeable Manhattan real estate market."

"'Time on the market has increased,' admits Schmitz, 'and there’s been nervousness.'"

From Reuters. "Less than 48 hours after news broke that Bear Stearns would be bought for a fire-sale price, the wives of two of the firm's senior investment bankers called their high-end interior designer to cancel their contracts."

"'We only had about $50,000 worth of final touches,' to go, 'and the wife called me last week and said stop,' said an interior designer, Darren Henault, whose work has been featured in magazines like Vanity Fair and Elle Decor."

"'She said that they're not poor, and are never going to be poor,' Henault said, 'but their capacity for discretionary income for things like window valances just went out the window.'"

"The wife of one of the Bear Stearns banker had planned to spend about $300,000 on the couple's apartment in the next three months, Henault said."

"Tom Martignetti, who owns the brasserie Bar Martignetti and a nightclub in New York, said sales of bottles of Champagne and vodka had tumbled about 25 percent since last year. To secure a table at his clubs, customers must buy three or four bottles at $300 to $550 each. The financial sector accounts for about 90 percent of these sales, which make up the bulk of a nightclub's revenue, Martignetti said."

"It is now easier to get a table at a top restaurant at the last minute midweek, due to the decline in reservations from the financial industry."

"'The nightlife and restaurant industry is based on celebrating,' Martignetti said. 'And a lot of my customer base has lost their jobs or are worried about losing their jobs - so nobody is celebrating.'"

"Businesses around Bear Stearns's New York headquarters, including a nearby Audi car showroom, said fewer bankers were browsing on their lunch hours."

"Daniel Crowley, a sales associate at Charles Tyrwhitt in the Bear Stearns building, said foot traffic past the high-end suit retailer had diminished, and traffic is a 'huge' component of sales since an attractive window display can lure customers."

"Kenneth Kleinart of Floral Impressions in New York said he had not yet seen any slowdown in flower orders. 'A few people have ordered flowers' for Bear offices 'just to cheer them up,' he said. 'They say it's like a morgue over there.'"

"Home sales slumped this year in Greenwich, Connecticut, as North America's hedge-fund capital experiences the effects of the credit crisis that has slashed Wall Street payrolls and profits."

"January and February home sales fell 29 percent to 75 houses in the town that's home to more than 100 hedge funds, property broker Prudential Connecticut Realty said yesterday."

"There were 106 sales in the year-earlier period for the town that's an hour's drive from Manhattan. The total value of properties sold dropped 18 percent to $215.1 million, according to the report."

"Financial sector jobs radiating from Manhattan are the primary driver of Greenwich real estate, according to brokers. Located about 35 miles northeast of Manhattan, the town of some 61,000 people has attracted financiers including...former Citigroup Chairman Sanford Weill."

"Sales of houses for less than $2 million fell 26 percent to 42 single-family homes and sales of residences for more than $2 million declined 33 percent to 33, according to Prudential."

"Former Citigroup CEO Charles Prince put his five-bedroom Tudor-style home up for sale there for $6.15 million in January, three months after stepping down as head of what was then the largest U.S. bank."

"'There is just no urgency, either for buyers or sellers,' said John W.M. Cooke, a Prudential broker who tracks the data. 'It's sort of a standoff here really, except if you are buying $5 million houses.'"